Path 2

Path 2

If They Build It, You’ll Pay

February 22, 2005

This, it’s fair to assume, is not how Dan Doctoroff envisioned it. The International Olympic Committee arrived in town last week—or rather, its site evaluation commission did, the greater IOC having been banned from travel after one too many prostitutes-for-votes scandals—and the questions for Olympic organizer-turned-deputy mayor Doctoroff were not about the pulse-pounding thrills of equestrian dressage, but rather: “What’s up with the stadium?”

Doctoroff bobbed and weaved, insisting that the beleaguered West Side stadium plan was on course, and no Plan B was in the works. Mayor Bloomberg chimed in with the promise of “a shovel in the ground” by the time the IOC votes in July, though he admitted that it might be a “symbolic shovel.”

Brave words all, and no doubt good salesmanship. But even the visiting Moroccan sprinters and Canadian yachtsmen had to notice that February was an unkind month for Bloomberg’s long-running stadium dreams. The Manhattan stadium may not be “dead as a doornail,” as one backer of a Queens Olympic site said hopefully last week—but as another noted New York sports figure would have put it, the ship be sinkin’.

The tide began to turn February 3, when State Assembly Member Richard Brodsky called MTA chief Peter Kalikow on the carpet at a state hearing. Brodsky, a state attorney general hopeful, blasted the authority for first granting the Jets single-source bidding rights to the rail yards site, then—when the team offered to pay less than a third of the MTA’s $330 million asking price—agreeing to submit to binding arbitration to pick a dollar figure. (As it turned out, “binding” was a misnomer: The Jets would later threaten to ditch the project unless the arbitrator returned with “a reasonable number.”) When Assembly Member Richard Gottfried pressed Kalikow on why he wasn’t soliciting other bids to get the best deal, the real estate magnate replied that the Jets’ “bird in the hand” was too good to pass up: “If I build a condo, if a guy comes and says I want to buy 20 apartments cash up front, I do it every time.”

Twenty-four hours later, Cablevision called Kalikow’s bluff. The bid heard round the world may not be worth $600 million to the MTA—$250 million would go for a deck over the rail yards, to support the housing that the Madison Square Garden owners promise to build there—but it still easily tops both the Jets’ $100 million offer and the MTA’s own asking price. As an added bonus, the city and state would be spared from paying the cost of the deck, and—unlike the Jets, as Paul Moses discusses elsewhere in this issue of the Voice—Cablevision agreed to pay property taxes on the site, potentially handing the city a $400 million windfall.

The only drawback: While the Jets plan would leave the MTA with excess air rights to sell to neighboring developers, the MSG plan would gobble up every last bit of allowable square footage for its apartment towers. If they’re salable—which many observers question, since the lot is bounded by the Hudson River, the Javits Convention Center, and another rail yard with its own glut of air rights to peddle—the MTA estimates they could be worth $600 million, which could yet be used to swing the decision in the Jets’ favor. In Kalikow’s “bird in the hand” terms, though, MSG effectively trumped the Jets.

Kalikow subsequently opened the bidding to all comers, earning headlines sounding the stadium’s death knell and plaudits from Brodsky for doing “God’s work.” So far, though, the only new bidder to emerge has been a gas company that, by its own admission, is just seeking publicity for its push to build a gas power plant on a Williamsburg site that the Olympic committee wants for an indoor aquatic center. Given that the Regional Plan Association’s Robert Yaro had predicted to the Voice‘s Tom Robbins that “some of the biggest developers in the world” were sniffing around the site, this is a bit of an anticlimax.

The problem, says the RPA’s Jeremy Soffin, is that “the bid process is weighted in favor of the Jets. They’re the only bidder that the state and city have promised to build a platform for. They’re the only bidder for whom the state has promised an override of the zoning.” The MTA also banned bids contingent on getting the same zoning approvals as the Jets are promised—a wrinkle that MSG is still mulling how to respond to—meaning that other developers would have to gamble on getting city approval to build what they’d budgeted for. Add in that an anti-Jets bid risks creating bad blood with Doctoroff, the official in charge of OK’ing all other city development projects, and the March 21 bid deadline could come down to two familiar players: the Jets versus Cablevision.

Even if the stadium clears that hurdle, though, there are higher ones ahead. First and foremost is the Public Authorities Control Board, a three-voting-member body created in the 1970s to rein in state authorities from issuing mountains of debt to fund every highway overpass that caught their eye. The PACB’s three votes, each with veto power, are controlled by the governor, state assembly speaker, and state senate majority leader; and in recent weeks, both Speaker Sheldon Silver and Majority Leader Joe Bruno have indicated that they see no need to sign off on a Jets stadium before the July IOC vote.

Of course, the mood could change in a hurry if New York wins the 2012 Olympics, but that’s increasingly looking like a slim reed on which to hang any stadium hopes. The Olympics-watch site gamesbids.com has New York running a distant fourth (behind Paris, Madrid, and London) and falling fast, in large part because of the ongoing stadium uncertainty.

Lurking in the background, meanwhile, is yet another obstacle that’s gotten little attention, but could hold the biggest long-term impact for city residents. To pay for the city’s $300 million share of stadium construction costs, Doctoroff has proposed raiding the pool of “payments in lieu of property taxes,” or PILOTs, that developers pay to the city Industrial Development Agency. Currently, the IDA just cashes the checks and then passes the proceeds through to the city treasury. If Doctoroff gets his way, the mayor would siphon them off before they ever reached the city’s own accounts—effectively creating an enormous off-budget slush fund for future mayors to do with as they see fit, without the meddling checks and balances of a City Council vote.

Mayors spending money without getting City Council approval would seem to be a big no-no, but incredibly, no one in or around city government seems to know for sure if the Doctoroff gambit would be illegal. The slush fund revelations have sent pol watchers poring through the General Municipal Law and city charter in search of answers, without much success. After vowing to take “every legislative and other remedy available” to stop the mayor’s end run, Council Speaker Giff Miller last week finally declared he’d submit legislation to block the move—but it’s still unclear whether this is even necessary (if the PILOT scheme is illegal under existing law, the council needs a lawyer, not a bill), or conversely, whether the council even has the power to rein in the IDA, which is a creature of state law, not city.

“In some ways this PILOT payment mystery is symbolic of this entire labyrinthine financing scheme,” says Stephanie Greenwood of Good Jobs New York, who’s studied the Jets finance plan in depth. “It’s very hard to pin down. And with all the stadium projects in the pipeline, it could become a way to lock the council out of decisions about development projects. It’s troubling.”